New for tax year 2025, you might be able to… here are the details:
In order to qualify to deduct your interest on a car loan:
- It must be on the purchase of a new vehicle in tax year 2025.
- The vehicle must have its final assembly in the United States –
- The VIN decoder website for the National Highway Traffic Safety Administration provides plant of manufacture information.
- The vehicle must be for personal use (no business use deductions)
- VIN number of the vehicle must be on the tax return
- A statement from the lender, showing the total amount of interest received in the tax year, will be required.
- More information is available for vehicles that are re-financed.
This car loan interest deduction is in addition to the taxpayers standard or itemized deductions. The maximum annual deduction is $10,000.
This deduction does have income limits/phaseouts. The deduction will start to phase out for taxpayers with income over $100,000 (or $200,000 for married filing jointly filers)
If you have any questions about this or any other tax topics, drop us an email at hello@pennypinchtax.com